Will the FCA Ban on Crypto Trading Force Ethereum Lower?
Ethereum prices, which looked like having run out of buying momentum, have turned lower on the day as news of the FCA ban on retail crypto trading permeates the cryptocurrency market. The FCA bombshell seems to have dimmed sentiment on Ethereum to a slight extent, even as MetaMask, one of the popular browser-based wallets announced that it had crossed the 1 million users mark.
MetaMask is one of the recommended secure wallet systems to use in Ethereum transactions. Ethereum has been riding high during the worst of the coronavirus pandemic, as the popularity of DeFi applications has increased its adoption and usage, sending it to multi-year highs at $484. However, prices have cooled since then and attempts to launch new rounds of buying have met a brick wall at the $360 mark.
The recent bearishness on Ethereum is as a result of the easing of network congestion, leading to a fall in Ethereum transaction fees by more than 85% according to data provided by analytics company Glassnode. The number of Ethereum transactions has also dropped by 1.32 million on September 17 (2020 high) to about 935,000 as of October 4. There has also been a 74% drop in the amount of Ethereum being sent in transactions.
The FCA ban may yet add another round of selling to the mix, as crypto users would be racing against the FCA’s January 6, 2021 deadline to move their Ethereum holdings away from UK exchanges.
Technical Outlook for ETHUSD
Ethereum is down by 2.11% on the day in its pairing with the US Dollar. This is a combined effect of the market reaction to the FCA ban, and the lack of buying momentum at the 361.39 resistance. Further decline could lead to Ethereum prices dropping to the 318.78 support, where price had found lows on 5/24 September. A breakdown of this support opens the door towards 286.47.
On the flip side, a bounce at 318.78 may allow for a retest of 361.39. Further advance beyond this level leads Ethereum towards the 382.60 resistance target. 401.52 and 413.36 are potential targets to the north, as these two targets had previously been tested at various times in August 2020.